Fort McKay oil sands ambassador at odds with industry

With the Fort McKay band seeking leave to appeal the recent Alberta Energy Regulator’s decision to approve the 250,000 barrels-a-day Dover oil sands project, uncertainty is far from over for Athabasca Oil Corp. and the project’s majority Chinese partner, PetroChina.

Similar uncertainty is poised to spread to other oil sands players in the area, who have been summoned by the wealthy band to a meeting on Thursday to discuss the Moose Lake reserve and why it needs a hefty buffer zone from development.

The upshot: The dispute between oil sands neighbours has the makings of a legal runaway train, a public relations mess and an impediment to good relations between the industry and the most productive and so-far supportive aboriginal community in the region.

As Bill Gallagher, a lawyer, aboriginal expert and author put it: “The oil sands, which undeservedly is continuing to garner an international black eye, now has soured the person who could be the most helpful in putting a happy face on it,” he warned. “[Fort McKay chief] Jim Boucher could have been the most important ambassador the oil sands ever had, and instead he’s going to go to the wall on an issue of vital importance” to his band. Mr. Gallagher believes the Fort McKay’s legal case is strong, and if successful could lead to years of litigation as other First Nations start demanding buffer zones between reserves and projects.

The Dover development, now known as Brion, together with the MacKay River project, were supposed to represent PetroChina’s big entry into the oil sands.

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The Chinese company already owns 60% of Brion and was expected to acquire the remaining 40% from Athabasca Oil for $1.32-billion by exercising an option right after the project’s regulatory approval. It already owns 100% of MacKay River.

But the game plan was stalled by opposition from the 700-member Fort McKays, who built significant wealth by providing services to the industry and are oil sands barons in their own right — their reserve sits on two billion barrels of oil.

The band wants a 20-kilometre buffer zone to protect traditional territory surrounding Namur and Gardiner lakes, also known as Moose Lake. A burial ground for ancestors, the Fort McKays regard the area as sacred. Many members built cabins there and use the land for hunting, trapping, fishing and picking berries.

In an interview, Chief Boucher said the band hoped for a mutually beneficial agreement to separate the area from production activity, but “at the end of the day [developers] saw a picture that was in my opinion unrealistic and therefore they cut off discussions with respect to the matter.”

Instead, the companies pushed the dispute in front of the energy regulator, and won its backing.

In a ruling last month, the regulator sided with developers and approved the project, dismissed the request for a buffer zone and said it didn’t have the jurisdiction to deal with constitutional issues raised by the band, such as its rights to preserve traditional lands and ways of life.

As expected, the Fort McKays moved the battle to the Court of Appeal of Alberta and are scheduled to plead their case Oct. 9 in Edmonton.

In a notice of motion, the band said it is seeking direction on whether the regulator erred by finding that it had no jurisdiction to consider constitutional issues and whether the error breached its constitutionally protected rights.

“We are taking these extraordinary steps to ensure that our voice is heard with respect to a decision that will affect our people in the future,” Chief Boucher said.

The Fort McKays won’t stop there. The band is also lobbying Alberta Premier Alison Redford, since the cabinet has final say on whether the project goes ahead, and is looking at other legal steps.

Meanwhile, the band has convened a meeting next week with developers in the area surrounding Moose Lake to start a dialogue about a buffer zone.

“We will certainty be presenting a picture that we hope will improve their understanding of how things get developed in the future,” Chief Boucher said.

The band won’t name the companies. The meeting is expected to involve as many as 10 developers, including Dover project backer Brion Energy Corp., with leases within 20 kilometres of Moose Lake.

For its part, Brion Energy is still hopeful for a solution and will continue to look at options with the band, even as the legal process moves forward, said Terry Bachynski, Brion Energy’s vice-president of regulatory affairs.

“We have been working with Fort McKay for years to come up with a way to pursue our right to develop our oil sands resource within our oil sands leases … but we respect the First Nation and their desire to enjoy their cultural practices and reserve land,” he said. “We have not found a magic bullet yet.”

It’s an unfortunate situation at a time the industry is fighting battles on so many other fronts. It’s also one that calls for everyone to try harder for an amicable solution — before the dispute erupts into another rallying cry to stop the oil sands.